Tuesday, February 24, 2015

This Thursday, February 26, will be a fateful day for the
future of the Internet. As I wrote recently in a Washington Times op-ed, “The
FCC’s Coming Internet Regulations,” “in the nearly 40 years that I have
been involved in communications law and policy, including serving as FCC
Associate General Counsel, this action, without doubt, is one of the agency’s
most misguided.”

As the vote approaches, I don’t have any second thoughts
regarding that statement. Reduced to its essence, the way I put it at the
beginning of the Washington Times
piece gets to the nub of the matter: “Regulating
Internet providers as public utilities in order to enforce net neutrality
mandates will discourage private sector investment and innovation – and lead to
even more special interest pleading at the FCC for favored treatment, and
heightened litigation for years to come.”

For those interested
in learning more about the forthcoming decision of the FCC’s Democrat majority
to regulate Internet providers, even wireless companies, there are literally
dozens, if not hundreds, of publications on the Free State Foundation’s website and its blog. And in a moment,
I want to call your attention especially to three pieces published just within
the past two weeks that are worthy of your attention.

But first this: The initial
essay I published this year, on January 2, was titled, “A Question for 2015: Is the FCC Unlawful?” The piece bears revisiting as the FCC is
poised to expand its control over the Internet in ways that threaten its future
without any present justification – that is, without a justification that is
not trumped up. The reality is that there is no evidence of present market
failure and consumer harm that justifies the Commission asserting more control
over the Internet – regardless of which theory of law the Commission relies
upon.

But here’s an
important point I wish to make regarding the FCC “lawfulness” in advance of
Thursday’s vote. As Philip Hamburger discusses in his new book, “Is Administrative Law Unlawful?”, one of the objectives of our Founders was to
control, if not eliminate, what in England was known as the “dispensing” power.
Simply put, the “dispensing” power – and this power is much discussed in
English constitutional history – was a form of exercise of royal prerogative
under which the King could avoid, or dispense with, complying with particular
laws, including those enacted by Parliament. As Professor Hamburger discusses
at some length, today’s administrative agencies, in essence, have resurrected
the “dispensing” power by the way they often use waivers to award favored
treatment.

Here is the way
Professor Hamburger puts it:

“After
administrators adopt a burdensome rule, they sometimes write letters to favored
persons telling them that, notwithstanding the rule, they need not comply. In
other words, the return of extralegal legislation has been accompanied by the
return of the dispensing power, this time under the rubric of ‘waivers.’”

And then he goes to
the heart of the matter:

“Like dispensations,
waivers go far beyond the usual administrative usurpation of legislative or judicial
power, for they do not involve lawmaking or adjudication, let alone executive
force. On the contrary, they are a fourth power – one carefully not recognized
by the Constitution.”

Now, I understand
that seeking and receiving “waivers” of the FCC’s rules (regardless of the
precise name applied to such dispensations) is an established part of FCC
practice. And in some instances, such waivers, in light of unique circumstances
or hardships, are no doubt justified. But I am convinced that under the new set
of Internet regulations about to be adopted by the Commission, we are likely to
witness the exercise of the agency’s “dispensing” power – this power which the
Founders wished to eliminate – in ways, and to such an extent, that rule of law
norms at the FCC will be called into further question.

This is what I meant
when I said above that the new regulations are likely to raise pleading for
special treatment and favors to new heights at the FCC. As the agency gains
even more control over various participants in the Internet and communications
marketplace, it will be subject to increasing pressures to use its dispensing
power to grant this or that company (or market segment) favored treatment. For
example, despite FCC protestations to the contrary, which protestations, by the
way, do violence to the ordinary usage of the English language, the FCC will
regulate the rates of some firms but not others, by holding unlawful the usage
plans, sponsored data, or zero-rating plans, of some firms and not others. Or,
to be sure, under its new inherently vague “good conduct” rule, the agency will
be granting dispensations to some firms and not others, based on the exercise
of discretion untethered to any standard in any law duly enacted by Congress.

This is part of what
I mean by asking the question: “Is the FCC Unlawful?”

Now, for further
readings in advance of the FCC’s February 26 vote (if you haven’t had a chance
to read them already, I commend to you these excellent Perspectives from FSF Scholars published in the past two weeks:

Each of them alone makes a convincing case that the course upon which the
agency is about to embark – imposing Title II public utility regulation on
Internet providers – will be harmful to consumers and to the future development
of the Internet by thwarting investment, innovation, and consumer choice. Taken
together, the case is devastating.

Now the act of imposing public utility regulation on Internet providers
that I decried this past September in “Thinking the Unthinkable” is about to become reality. In the aftermath
of the significant extension of government control over the Internet that,
absent intervention by the courts or Congress, will ensue, I am convinced the
question I posed at the beginning of the year – “Is the FCC Unlawful?” – will be asked with increasing frequency
and seriousness of purpose.